Factors to affect metal prices this week

Dubai-UAE (Apr 10) The precious metal started the week on a higher note with retail prices in Dubai posting a Dh2 per gram increase on Sunday.

There have been expectations that the precious metal could post further increases this week due to rising stock market volatility and weaker dollar.

As of 11:20am on Sunday, 24-carat gold was retailing at Dh150 per gram, up by 1.33 per cent from a week earlier and 0.83 per cent from the end of last month. Spot prices increased by 1.4 per cent last week, mainly because of Thursday’s 1.5 per cent rally, according to Reuters.

In a recent survey by Kitco, 80 per cent of 1,287 retail investors and market professionals said they expect the bullion to increase this week.

Analysts said that gold’s direction in the short term could be affected by further stock market volatility, US dollar weakness and heightened discussions around interest rates.

Spot gold was at $1,239.70 an ounce by 2.27pm EDT on Friday.

Ole Hansen, head of commodity strategy at Saxo Bank, hinted that the week doesn’t look promising for the stock markets. “The first-quarter US earnings season kicks off [this week] and following a strong rally since February, the market is bracing itself for the worst season since the 2009 crisis,” he wrote in his latest research note.

“A weaker dollar (most recently against the Japanese yen), the risk of rising stock market volatility, and the continued focus on negative interest rates may attract renewed interest for gold and silver earlier than expected,” Hansen said.

Hansen said there are two important resistance levels for gold to watch out for in the short term. “First of all, there is $1m245 per ounce, which apart from being the recent top also represents a 50 per cent retracement of the March selloff.”

“A break above the more important $1,255 area – the 61.8 per cent retracement – would signal a return to the high and potentially beyond. The key area of support remains between $1,165 per counce and $1,195 per ounce.”